Silver's Turn?

It looks like gold has passed the test and made bottom, now it’s silver’s turn. Silver has acted quite poorly over the last 10 days while gold put in a base. The interesting thing is that silver’s open interest on the COMEX has risen during this time which means the poor action should be attributed to fresh shorts as opposed to long liquidation. The Bollinger bands are as tight as they’ve been for 5 years and hedge funds appear to all be on one side of the boat… under-invested and even short.

As I wrote 2 to 3 weeks back about gold having an “important day”, I believe that today is the same for silver. After being down roughly 50 cents, it is beginning to turn. Should silver close unchanged or even positive today, the shorts will truly have something to worry about. “Outside” days are rarely allowed in either silver or gold. Gold had its turn a couple of weeks back, let’s see if silver can perform a repeat and turn in its own “outside day.” Should this occur and silver begin to act better, I think that short covering will begin (and be forced) in earnest and physical buyers will step up purchases in fear of missing the boat. When (if) the Cypriot banks open tomorrow, we will probably see long bank lines and possibly violence in living rooms across the globe. This can only add to the current “uneasiness” and bleed more fiat into physical metals. We watch and wait.

2 Comments

Bob A
on March 29, 2013 at 9:19 pm

Hey Bill, I just had a friend whom I just introduced to precious metals send me this note. I laughed and said no way. He bought his first 50 oz of silver eagles last week, but now thinks he made a mistake…he said, what if silver goes to 14.00? I said yum, yum…he didn’t think that was too funny. How do you respond to bunk like this?

If Silver went to $14 (what a strange number) I would tell him to buy as much as he could and thank God he had the first 50 ounces. At $14 he should mortggae the farm, all equipment and his children to buy everything he could…EXCEPT for one small problem… were Silver to ever get back to $14 there will be no physical available to change hands! So, the moral to the story is to tell your friend he had better hope that Silver never again gets to $14 because he will be shut out of the market as none will be available. Sounds strange but you can take this one to the bank, we have already seen absolutely ZERO Silver available for sale the last time in 2008 when it “supposedly” dropped to $9. …I wonder how history will report the “$9” prices of 2008? Were they real or were they photoshopped?

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